Reprofiling of existing Debt Facilities

RNS Number : 5235O

EQTEC PLC

01 June 2020

 

1 June 2020

EQTEC plc

("EQTEC", the "Company" or the "Group")

Reprofiling of existing Debt Facilities

EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects, today announces it has reached agreement to reprofile the payment obligations with its lenders, resulting in, inter alia, the extension of the maturity dates to 30 June 2021 (the "Debt Reprofiling").

The Company currently has two major lenders, being Altair Group Investment Ltd ("Altair") and the "Riverfort Lenders" (being, collectively, Riverfort Global Opportunities PCC Ltd (formerly Cuart Investments Fund) and YA II PN, Ltd). As part of the Debt Reprofiling, Altair and the Riverfort Lenders have agreed to extend the maturity date for their respective loans, as well as agreeing to certain other changes to the commercial terms of such loans, as detailed below.

Altair Loan Facility

As announced by the Company on 28 June 2019, the Company and Altair agreed to amend and restate the secured loan facility between the parties (the "Altair Loan Facility"). As at the close of business on 31 May 2020, the outstanding principal under the Altair Loan Facility was £860,000 and there was £96,370 of accrued and unpaid interest. Interest accrued on the principal amount of the loan at a rate of 12.5 per cent. per annum. The outstanding principal and accrued interest were due to be repaid to Altair on 31 July 2020 and the Company was also required to pay Altair a redemption fee of 8 per cent. on the sum due for payment (the "AltairRedemption Fee"). Altair had a right, at its sole discretion, to convert the outstanding principal and interest , in part or in full, at any time up to 31 July 2020 into new ordinary shares of €0.001 each in the capital of the Company ("Ordinary Shares") at a price of 0.66 pence per share.  The Altair Redemption Fee is not payable on any debt converted in this manner.  However, Altair can only elect to convert if such exercise would not trigger an obligation under Rule 9 of the Irish Takeover Rules to make a general offer for the balance of issued shares in the capital of the Company.

On 1 June 2020, the Company and Altair entered into a deed of amendment (the "Altair Deed of Amendment"), pursuant to which the parties have amended the Altair Loan Facility as follows:

· The outstanding principal and interest of £956,370 has been consolidated into a new principal amount (the "Altair Loan").

· As of 1 June 2020, interest accrues on the Altair Loan at a rate of 10 per cent. per annum rather than 12.5 per cent. per annum.

· The repayment date of the Altair Loan has been extended from 31 July 2020 to 30 June 2021.

· In the event of the conversion of the Altair Loan, the conversion price shall be the higher of: (i) 0.375 pence per new Ordinary Share; and (ii) a 10 per cent. discount to the volume weighted average price of the Ordinary Shares on AIM ("VWAP") for the ten trading days immediately preceding the delivery of a conversion notice.

· Any shares issued as product of the conversion of the Altair Loan will be subject to a lock-in until 30 June 2021.

· A reprofiling fee of £95,637 (being 10 per cent. of the Altair Loan as at 31 May 2020) shall also be paid by the Company to Altair on the maturity date of the loan. This is in addition to the existing Altair Redemption Fee.

Save to the extent amended by the Altair Deed of Amendment, the Altair Loan Facility remains on the terms previously announced, with a balance of £1,083,882 available for draw down by the Company and will remain secured by mortgage debentures, cross guarantees and share pledges over EQTEC and its subsidiary companies.

Riverfort Facility

On 5 July 2018, the Company announced that it had agreed a secured loan facility of up to US$3.2 million, to be provided by the Riverfort Lenders, as amended and announced on 3 October 2018 (increasing the amount available under the facility to up to US$10 million), 11 January 2019 (amending certain repayment terms) and 28 June 2019 (further amending certain repayment terms and dates and agreeing to cost reduction measures) (the "Riverfort Facility"). 

As at the close of business on 31 May 2020, there was outstanding principal of US$1,582,993, plus US$183,779 of accrued and unpaid interest thereon pursuant to the Riverfort Facility, for a total outstanding amount of US$1,766,772 (approximately £1.4 million). Interest accrued on the principal amount of the loan at a rate of 12.5 per cent. per annum. The outstanding principal and accrued interest were due to be repaid to the Riverfort Lenders on 31 July 2020 and the Company was also required to pay the Riverfort Lenders a redemption fee of 8 per cent. on the sum due for payment (the "RiverfortRedemption Fee"). The Riverfort Lenders have the right, subject to the occurrence of an event of default under the Riverfort Facility, to convert the outstanding principal and interest, in part or in full, at any time up to 31 July 2020 into new Ordinary Shares at a price of 0.66 pence per share (the "Fixed Price").  The Riverfort Redemption Fee is not payable on any debt converted in this manner. 

On 1 June 2020, the Company and the Riverfort Lenders entered into a deed of variation (the "Riverfort Deed of Variation") pursuant to which the parties have amended the Riverfort Facility as follows:

· The outstanding principal and interest of US$1,766,772 has been consolidated into a new principal amount (the "Riverfort Loan").

· As of 1 June 2020, interest accrues on the Riverfort Loan at a rate of 10 per cent. per annum rather than 12.5 per cent. per annum.

· The previous repayment date of the Riverfort Loan of 31 July 2020 has been varied as follows:

o  US$100,000 (plus any Riverfort Redemption Fee payable) will be paid to the Riverfort Lenders as soon as possible and, in any event, no later than 30 June 2020; and

o  US$555,000 (plus accrued interest and any Riverfort Redemption Fee) will be repaid on 29 January 2021; and

o  the remaining balance, being US$1,111,772 (plus accrued interest and any Riverfort Redemption Fee) will be repaid on 30 June 2021.

· Notwithstanding the above, if EQTEC closes a third-party fundraising prior to any of the repayment dates, 20 per cent. of the gross proceeds of such fundraising will be used to settle the relevant portion of the instalment of the Riverfort Loan due on the next repayment date (together with the interest that has accrued thereon and remains unpaid and any Riverfort Redemption Fee), subject to the payment being no more than $353,354.

· A reprofiling fee of $176,677 (being 10 per cent. of the Riverfort Loan as at 31 May 2020) shall also be paid by the Company to the Riverfort Lenders as soon as possible and, in any event, by 30 November 2020. This is in addition to the existing Riverfort Redemption Fee mentioned above.

Only on the occurrence of an event of default under the Riverfort Facility is the Riverfort Loan convertible by the Riverfort Lenders.  In the event of the conversion of the Riverfort Loan, the conversion price shall, at the election of the Riverfort Lenders, be either: (i) the Fixed Price; or (ii) an amount equal to 90 per cent. of the lowest daily VWAP for the ten trading days immediately preceding the conversion date.

Save to the extent amended by the Riverfort Deed of Variation, the Riverfort Facility remains on the terms previously announced and will remain secured by mortgage debentures, cross guarantees and share pledges over EQTEC and its subsidiary companies.

Pursuant to the terms of the Riverfort Deed of Variation, the Riverfort Lenders have agreed to surrender the existing warrants granted to them by EQTEC over an aggregate of 114,646,452 Ordinary Shares (at exercise prices of 1.19 pence per share for 81,296,134 Ordinary Shares and 1.57 pence per share for 33,350,318 Ordinary Shares) in return for the grant by the Company of warrants over 191,000,000 Ordinary Shares (with warrants over 95,500,000 Ordinary Shares to be granted to each Riverfort Lender). Such warrants will be exercisable for a period of three years from the date of grant at a price of 0.375 pence per share which is a 44% premium on the closing price on Friday 29 May 2020 which was the last available share price prior to the agreement between the parties being finalised.

Related party transaction

Altair has an existing holding of 1,137,432,501 Ordinary Shares in the Company representing 28.87 per cent. of the Company's issued share capital and, as such, is a substantial shareholder as defined in the AIM Rules for Companies ("AIM Rules").  As a result, entry into the Altair Deed of Amendment is a related party transaction pursuant to Rule 13 of the AIM Rules. Accordingly, the directors of the Company, having consulted with the Company's Nominated Adviser, Strand Hanson Limited, consider the terms of the Altair Deed of Amendment to be fair and reasonable insofar as the Company's shareholders are concerned.

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

Enquiries

EQTEC plc	[phone]
David Palumbo / Gerry Madden
Strand Hanson - Nomad & Financial Adviser	[phone]
James Harris / James Dance / Jack Botros
SI Capital Limited - Broker	[phone]
Nick Emerson / Jon Levinson
IFC Advisory - Financial PR & IR	[phone]
Tim Metcalfe / Graham Herring / Zach Cohen

Notes to Editors

About EQTEC plc

EQTEC is a technology partner with proven proprietary patented technology for waste-to-value applications. 

EQTEC designs and supplies advanced gasification solutions that have a higher efficiency product offering and are modular and scalable from 2MW to 30MW. Of particular importance is the versatility of our solutions to process over 50 different types of feedstock, including municipal waste, agricultural waste, biomass and plastics. Our solutions produce a uniquely pure high-quality synthesis gas (syngas), that is capable of being used for the widest applications in energy and biofuels.

Proprietary technology design together with deployment and maintenance capabilities mitigate the risks when using third party equipment.  Our Technology Integration capabilities enable us to lead collaborative ecosystems that build sustainable, waste elimination and green energy infrastructure.

The Company is quoted on AIM, bears the Green Economy Mark awarded by the London Stock Exchange and trades as EQT.  Further information on the Company can be found at www.eqtecplc.com .

 

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